Cryptocurrency executive Jesse Powell is under investigation by federal authorities for claims that he hacked and cyber-stalked a nonprofit he founded, according to three people with knowledge of the matter. In March, the FBI searched his home in the Brentwood neighborhood of Los Angeles and seized electronic devices.
The U.S. attorney’s office for the Northern District of California and the FBI have reportedly been looking into the case since at least last fall. Brandon Fox, a lawyer for Powell, confirmed the investigation, saying that it was related to allegations from the arts group Verge Center for the Arts, and had nothing to do with his activities in cryptocurrency.
A Kraken spokeswoman stated that the Verge investigation was unrelated to the company and there was no reason to suspect that other potential issues were being investigated. Neither the FBI nor the U.S. attorney’s office would confirm whether an investigation was underway.
Recent months have seen the authorities crack down on several of Kraken’s competitors. Sam Bankman-Fried, the founder of the FTX crypto exchange, was charged with fraud and Coinbase and Binance face government lawsuits.
Powell is the founder of Kraken, the second-largest U.S. crypto exchange behind Coinbase. His company has faced legal scrutiny in recent months, with prosecutors examining allegations made in a wrongful termination lawsuit against Kraken. The lawsuit accused the firm of earning revenue from accounts in countries under U.S. sanctions, and alleged that Kraken’s bank accounts were missing millions of dollars of customer deposits. The lawsuit was settled in 2021.
Kraken has also paid a $360,000 fine to settle Treasury Department charges that it violated sanctions by allowing users in Iran to trade digital currencies, as well as a $30 million fine to the Securities and Exchange Commission for offering an investment product that violated securities laws.
Last year, Powell was removed from the board of directors of Verge Center for the Arts, citing his failure to attend board meetings and violations of the organization’s “guiding principles”. After his dismissal, he blocked Verge from using its website, emails and internal messaging system, and improperly accessed confidential information stored in those accounts. Powell subsequently sued Verge in state court in Sacramento, claiming his ouster was improper and that he owned Verge’s digital accounts. Verge’s lawyer denied the claims.
In September, Powell announced he was stepping down as Kraken’s CEO while remaining chairman, with Dave Ripley, Kraken’s Chief Operating Officer, taking over the reins of the firm in March.
Kirsten Noyes and Kitty Bennett contributed research.
